What to Do When the Court Orders a Levy on Your Bank Account

Light from open vault door
Photo: Donald Iain Smith / Getty Images

If a creditor gets a court judgment against you, they may be able to ask the court for a bank levy—a process where the creditor takes the money from your bank account to satisfy a court-ordered debt. When a levy is issued, your bank account(s) are frozen, and you can't access the money in your account until the debt has been repaid.

You don't have to be worried that just any creditor can levy your bank account at will. A creditor can’t levy your bank account without first winning a lawsuit judgment against you and then obtaining a court order to levy your bank account. Or, in the case of a tax levy, the IRS will have sent a bill for payment, allowed you to neglect or refuse to pay, then sent a final notice of intent to levy.

For a certain amount of time, your bank account is frozen, and you have the opportunity to get the levy lifted. However, if the levy isn’t lifted, the creditor can take the money from your bank account until the debt has been satisfied.

Income That Can't Be Levied

According to the U.S. Federal Trade Commission (FTC), certain deposits, like Social Security income, Supplemental Security Income, and Veteran’s Benefits, generally can’t be levied. However, if this money is mixed in your account with other money, you’ll have to prove which money is exempt from the levy and which is not. The bank is required to review your account for protected funds before allowing creditors to take money from your account.

A first-in, first-out type of system is sometimes used to decide which money is not subject to levy. For example, if your Social Security income was deposited first and you later spent money from your checking account, that first money spent will be assumed to come from the Social Security income. It means you may have already spent the income that’s exempt from levy and everything else is subject to the levy. Exception: The IRS can levy Social Security benefits, and the Treasury can levy for certain child support and alimony payments.

How to Avoid a Bank Levy

By the time you receive notice that a creditor is preparing to levy your bank account, you’ll have likely received other notices about the debt. If you want to avoid having your bank account levied, you need to act fast.

Pay Your Bill or Set Up a Payment Arrangement 

If you have the money to pay your debt in full, doing so will keep help you avoid a levy. Otherwise, you may be able to enter a payment agreement to pay back your debt in installments. Agreeing to monthly ACH debits from your bank account may give the creditor more assurance that you’re committed to repaying your debt.

Try to Settle the Debt for Less Than the Full Amount Owed

The creditor may be willing to accept less than the full balance due, but you have to talk to them to make this type of arrangement. Note that if the creditor agrees to settle your debt, the remaining portion that’s canceled is subject to taxation on your next year’s tax return.

Getting It Lifted

Once a levy is in place, the creditor may keep withdrawing funds from your bank account until the entire debt is repaid. You may be able to get the levy lifted by taking care of the obligation, making a payment arrangement, or settling the debt.

Or, if you were never properly served with notice of the original lawsuit, you may be able to get the judgment vacated. An attorney can work with you to file the necessary court documents to have the judgment overturned.

Certain debts are subject to a statute of limitations and are not legally enforceable after a certain period of time. This argument can also help you get a levy reversed but also requires an attorney’s help. Finally, filing bankruptcy may also be an option for getting a levy released. Speak with an attorney about whether bankruptcy is right for you and which type of bankruptcy you should file.

Frequently Asked Questions (FAQs)

Who can levy your bank account?

Any creditor to whom you owe money could levy your bank account, but they can only do so with a court order. Certain government institutions—namely the IRS—don't need a court order and can levy your bank account if you've been for delinquent long enough.

How long does it take for a bank to release a levy?

If you can set up a payment agreement with the IRS or a creditor, they could send a letter to your bank and release the levy that same day. More complicated arrangements or requests to pay only a portion of the debt could take longer.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Consumer Financial Protection Bureau. "Can a Debt Collector Garnish My Bank Account or My Wages?"

  2. Consumer Financial Protection Bureau. "What Is a Judgement?"

  3. Internal Revenue Service. "What Is a Levy?"

  4. Federal Trade Commission Consumer Information. "Garnishing Federal Benefits,"

  5. Office of the Comptroller of the Currency. "What Can I Do If My Bank Account Is Frozen and It Includes Social Security or Other Federal Benefit Payments?"

  6. Office of the Comptroller of the Currency. "Are My Federal Benefits Automatically Protected By My Bank From a Garnishment Order?"

  7. Internal Revenue Service. "What You Need to Know: The Federal Levy Payment Program,"

  8. Federal Trade Commission Consumer Information. "Coping With Debt: Self-Help,"

  9. Consumer Financial Protection Bureau. "What Is the Best Way to Negotiate a Settlement With a Debt Collector?"

  10. Federal Trade Commission Consumer Information. "Coping With Debt: Debt Relief Services,"

  11. Consumer Financial Protection Bureau. "My Debt Is Very Old: Can Debt Collectors Still Collect?"

  12. Law Office of Seth L. Hanson. "Can Bankruptcy Reverse a Wage Garnishment or Levy?"

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